EIS: deferral relief: shares issued before 6 April 1998: when is the deferred gain brought back into charge?
The deferred gain or part of the deferred gain will be brought back into charge when there is a chargeable event. The following are chargeable events whenever they take place.
- A disposal, including a deemed disposal of the EIS shares by the investor except a disposal to their spouse or civil partner which is covered by the no gain/no loss rule in TCGA92/S58, see CG22200 onwards.
- A disposal of the EIS shares by a person who acquired them on a no gain/no loss transfer from their spouse or civil partner, the original investor. This does not apply to no gain/no loss disposals back to the same spouse or civil partner.
- The investor becomes non-resident within 5 years of the issue of the EIS shares, but see exceptions at VCM22080.
- The person who received the shares on a no gain/no loss transfer from their spouse or civil partner becomes non-resident within 5 years of the issue of the shares, but see exceptions at VCM22080.
Before 6 April 1998 there were two further chargeable events
- When the company ceased to be a qualifying company for EIS purposes within 3 years after the shares were issued or within 3 years from commencing trading if this were later.
- When the EIS income tax relief was withdrawn or reduced in circumstances to which (a) to (e) above did not apply.
FA98 introduced new TCGA92/SCH5B/PARA3 (1)(e) which replaces these with effect from 6 April 1998. There is a chargeable event when eligible shares cease to be eligible see VCM23060.